House Resolution Could Help Veteran Homebuyers Could Save Big

The resolution calls on Congress to stop using one group of Veterans' benefits to pay for benefits that help another group of Veterans.
Advertising Disclosure.

Advertiser Disclosure: The Military Wallet and Three Creeks Media, LLC, its parent and affiliate companies, may receive compensation through advertising placements on The Military Wallet. For any rankings or lists on this site, The Military Wallet may receive compensation from the companies being ranked; however, this compensation does not affect how, where, and in what order products and companies appear in the rankings and lists. If a ranking or list has a company noted to be a “partner,” the indicated company is a corporate affiliate of The Military Wallet. No tables, rankings, or lists are fully comprehensive and do not include all companies or available products.

The Military Wallet and Three Creeks Media have partnered with CardRatings for our coverage of credit card products. The Military Wallet and CardRatings may receive a commission from card issuers.

Opinions, reviews, analyses & recommendations are the author’s alone and have not been reviewed, endorsed, or approved by any of these entities. For more information, please see our Advertising Policy.

American Express is an advertiser on The Military Wallet. Terms Apply to American Express benefits and offers.

VA funding fee on capital hill

A resolution introduced in the U.S. House over the summer could mean major savings for Veteran homebuyers and homeowners if Congress ultimately gets on board.

The resolution from Rep. Blaine Luetkemeyer (R-Mo.) calls on lawmakers to stop funding Veterans’ benefits on the backs of other Veterans. In recent years, Congress has hiked fees associated with some benefits – primarily the VA loan program – to pay for other Veteran benefit programs.

Introduced in late July, House Resolution 612 urges the House to publicly recognize that “Veterans should not be used as the ‘pay-for’ to support veterans’ benefits” and to oppose legislative efforts to raise or introduce new fees that Veterans have to pay to access their benefits.

“We owe our Veterans support, gratitude, and at the very least, the financial benefits they’ve earned through their years of service,” Rep. Luetkemeyer said in a statement. “Applying additional fees impedes the purpose of helping to level the playing field for service members who missed opportunities to save, pursue college or otherwise get ahead professionally and financially.”

Funding fee controversy

Congress’ use of the VA Funding Fee to pay for Veteran benefits has raised the ire of Veteran service organizations and other groups on Capitol Hill. This governmental fee applies to most VA loans and now ranges from 0.5 to 3.3% of the loan amount.

Earlier this year, funding fees fell back to pre-2020 levels, after Congress passed a temporary increase to help pay for disability benefits for a group of Vietnam-era Navy Veterans.

Most Veterans finance the funding fee into their loan rather than pay it in cash at closing. Higher funding fees often mean homeowners wind up underwater on their new mortgages for longer. That can make relocation difficult, particularly for active duty service members.

The funding fee decrease this spring didn’t necessarily look big on paper – the fee for first-time users of the benefit dipped back to 2.15% from 2.3%, while the subsequent use fee returned to 3.3% from 3.6%.

But those cuts alone will save Veteran homebuyers more than $200 million over the life of their loans.

“We are very grateful to Representative Luetkemeyer for his efforts to bring attention to this important issue,” said Patrick Cox, chief production officer at Veterans United Home Loans, the country’s largest VA lender. “Keeping the VA Funding Fee costs from escalating is vital for the long-term sustainability of the VA loan program. It’s a very important focus of ours to keep the VA loan affordable for our Veterans and military families who have sacrificed to great lengths for our country.”

Your Mortgage Interest Rate — Let’s Do The Numbers
GET YOUR ACTUAL RATE
Estimated interest rate*
--

The Military Wallet's methodology:


*Rate data provided by RateUpdate.com. The displayed rates come from multiple providers and represent market averages. Your mortgage rate will differ based on individual factors like your credit score as well as differing loan types and terms offered by lenders.


Click "Get Your Actual Rate" to connect with a licensed mortgage lender for a more accurate quote.

Powered by Mortgage Research Center, LLC | NMLS 1907

Significant potential savings

The funding fee primarily helps the VA pay claims to lenders when a Veteran defaults on their loan. At least one study has suggested that Congress could lower the fees substantially – to more in the neighborhood of 1.32% – and still cover the VA loan program’s losses and operating costs.

VA Funding Fees were slated to fall more in that range a decade ago. Legislative plans called for the first-time use fee to settle at 1.4% and the subsequent use fee to drop to 1.25%. But those lower fees never materialized because Congress continued to extend the higher fees.

The savings differential between those would-be fees and today’s rates is stark, not just in what Veterans finance up front but what they pay in additional interest over the life of their loan.

On a $400,000 purchase, the funding fee for repeat buyers comes out to $13,200 with the current 3.3% rate. At 1.25%, that cost drops to $5,000, which winds up saving buyers who finance the fee about $18,000 over their mortgage term at today’s interest rates.

About Post Author

Get Instant Access
FREE Weekly Updates! Enter your information to join our mailing list.

Reader Interactions

Leave A Comment:

Comments:

About the comments on this site:

These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.

The Military Wallet is a property of Three Creeks Media. Neither The Military Wallet nor Three Creeks Media are associated with or endorsed by the U.S. Departments of Defense or Veterans Affairs. The content on The Military Wallet is produced by Three Creeks Media, its partners, affiliates and contractors, any opinions or statements on The Military Wallet should not be attributed to the Dept. of Veterans Affairs, the Dept. of Defense or any governmental entity. If you have questions about Veteran programs offered through or by the Dept. of Veterans Affairs, please visit their website at va.gov. The content offered on The Military Wallet is for general informational purposes only and may not be relevant to any consumer’s specific situation, this content should not be construed as legal or financial advice. If you have questions of a specific nature consider consulting a financial professional, accountant or attorney to discuss. References to third-party products, rates and offers may change without notice.

Advertiser Disclosure: The Military Wallet and Three Creeks Media, LLC, its parent and affiliate companies, may receive compensation through advertising placements on The Military Wallet. For any rankings or lists on this site, The Military Wallet may receive compensation from the companies being ranked; however, this compensation does not affect how, where, and in what order products and companies appear in the rankings and lists. If a ranking or list has a company noted to be a “partner,” the indicated company is a corporate affiliate of The Military Wallet. No tables, rankings, or lists are fully comprehensive and do not include all companies or available products.

Editorial Disclosure: Editorial content on The Military Wallet may include opinions. Any opinions are those of the author alone, and not those of an advertiser to the site nor of  The Military Wallet.

Information from your device can be used to personalize your ad experience.